There's been a lot of hand-wringing of late regarding the imminent demise of America's global economic dominance as China's gross domectic product (GDP) outstrips that of the United States. Those concerns are overwrought -- aggregate output and average quality of life in a country are two very different things. But if you really want to preserve America's top spot in the GDP rankings, there's only one way to do it. You've got to make more Americans.
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Depending on whom you ask and how you measure, the United States either already has a smaller economy than China, will have a smaller economy than China in the next few years, or will fall behind sometime in the next half-century. What seems widely agreed upon is that American economic dominance will end.
It would be nice to imagine keeping the top spot through rapid income growth. But according to the World Bank, average U.S. income growth for the last two decades was just 1.5 percent. Even in the high-rolling period between 1992 and 2000, U.S. GDP per capita grew by a little under 2.7 percent a year. Over the last two decades, China's income per capita grew at an average rate of 9.3 percent. That rate may well fall in the future -- indeed, economic theory and the scary state of the country's banks suggest it will. But it could fall by half and still outpace U.S. long-term performance by over 3 percentage points a year.
Does that mean it's all over for U.S. economic dominance? Probably. But at least Americans can delay the inevitable. If the United States can't keep up its output lead by more rapid growth of GDP per capita, then perhaps it should just find some more capita. After all, if you double the population while keeping incomes constant, you've doubled the size of GDP. And rough measures suggest that a lot of people would be willing to help -- approximately 145 million adults worldwide are keen to move to the United States, according to Gallup's global polling.
In fact, the strategy of bringing more people into the United States is already playing an important role in staving off the end of American global dominance. The United Nations predicts that China's population will rise from 1.27 billion in 2000 to nearly 1.4 billion by 2050. Meanwhile, the U.S. population is projected to grow from 285 million to 409 million -- a far more rapid growth rate. America's population will climb from 22 percent of China's to 29 percent over the half-century. And about four-fifths of that U.S. population growth will be due to new immigrants and their descendents.
The World Bank suggests that China's GDP per capita at market exchange rates was about $4,400 in 2010, compared with $47,200 in the United States. Assume, for the sake of argument, that U.S. income per head grows at 2 percent annually over the next 40 years, while China's per capita growth is 5 percent. Given demographic trends, by 2050, China's economic output at market rates will be about the same size as the America's, at around $43 trillion. But if there were none of the migration that demography experts predict over the next 40 years, the United States would have an economy only three-quarters as big as China's by midcentury. On the other hand, imagine the U.S. population grew just a bit faster -- to, say, 450 million by 2050. The country would then remain the world's economic superpower in terms of what it could buy globally, with a market income more than $3 trillion larger than China's.
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